US Election win will keep rates at rock-bottom levels for years

Donald Trump’s shock election as US president could keep interest rates at rock-bottom levels for even longer in the UK, experts said on Wednesday.

Prospects of a first rate rise since 2007 were already distant after the Brexit vote in June, even though Bank of England Governor Mark Carney put a potential hike back on the table last week.

Trump has pledged to “double” economic growth with deep tax cuts which could send the nation’s deficit soaring — but uncertainties remain over his hard campaign rhetoric and aggressive protectionist stance with rivals such as China which could hit trade. The US is the destination for a sixth of all UK goods exports.

Investec’s chief UK economist Philip Shaw said it was “too early” to assess the implications but added: “In more uncertain times the rule of thumb is that policy remains on hold.”

The fate of Federal Reserve chairman Janet Yellen — attacked by Trump during the campaign — is also unclear.

The Democrat is two years into a four-year term and the president could press for her removal, according to ING’s Rob Carnell. The president can only remove a Fed chairman by changing the Federal Reserve Act. “He won’t care that it has not been done before,” Carnell said.